Pay to Play: Politics, Money, and the Business of American Sports

Welcome back to the Fairfax Files. Today we are fortunate to be joined by one of the country's leading experts on the intersection of sports law, business and ethics. Professor Marc Edelman is a nationally recognized sports law scholar, attorney and commentator whose work examines some of the most important issues shaping modern athletics, from sports betting and antitrust law to athlete compensation, league governance and institutional accountability. Professor Edelman has published more than 75 law journal articles, presented research at upwards of 200 academic conferences, and has testified in front of multiple government agencies. Professor Edelman, welcome to the Fairfax Files. Thank you for being with us today. I love sports. I can talk about sports 24/7. But the Knicks, one NBA season's over. The Super Bowl is months and months in the past. We haven't hit the All-Star Game yet. There's really nothing. Wait a second. There's that World Cup thing. That's right. We can talk about the World Cup now. I've come to learn that the World Cup is the largest sporting event in the world. There's more viewers and probably more money involved in the World Cup than any other sport, perhaps any other sports combined. I have a very important question for you. Did the president jinx the US Team against Belgium?

No, he did not.

I don't know. Let's talk about that. You know, sports is not only talent, it's psychological. And I watched that game, and the US Team seem to be themselves from the beginning of that match, whether it was an offense or defense, they seemed to be out of sync. And I just wondered whether that controversy over the banning of Balogun and then the reprieve had anything to do with it.

Well, as important as the president of the United States likes to tell us that he is, I seem to take the view that a professional soccer team like US Soccer is able to tune all of that out. My take is just Belgium is the best team they've encountered so far along the way. And, you know, it was really unfortunate after they tied the game up at 1 1, when they gave up a second goal so quickly afterwards. To me, that took them more out of the game than the involvement of the United States in trying to reinstate one of our players, the involvement of the United States.

So I know a little bit about FIFA. I sat on the Independent Governance Committee of FIFA during the height of their scandal in 2012, 2013. FIFA has always been an organization that had prided itself on keeping politics and government out of sports time and time again, whether it was the former Secretary General Blatter or the current Secretary General Infantino. They emphasized that government has no role in sports. However, here it looked like there was some influence in terms of the current president calling up Infantino and asking him about the red card, which, according to the President, he didn't even know what it was until he saw the film of that foul. So what about government and sports? Where do they intersect and where shouldn't they intersect?

Well, it's interesting when we talk about whether it be the Olympics or the World Cup, the founders and current administrators of the organization say things like, it's supposed to be separate from government and it's supposed to be separate from nationalism. And then if you look at the reality of these events, unlike US Professional sports in the Olympics and the World Cup, you know the name of the team is the very country. It's the United States. And certain countries, based upon the perception of bad actions, are not allowed to have teams. And if you look at the governance structure of US sport on the Olympic and World Cup level, the Ted Stevens act of 1978 gave quasi government power to a chosen association to oversee sport. So on one hand, we say we don't want this to be nationalistic and we don't want government involved. But unlike in Major League Baseball or National Football League, if we want to be honest with ourselves, everything about the Olympics and everything about the World Cup is national competition.

So you mentioned the fact that government has quasi oversight responsibility. Be a little bit more specific about that.

Well, if you look at the Ted Stevens act of 1978 and the amendments to that act, the United States chooses the governing body to oversee each sport. So they have empowered the governing body for soccer. Consequently, the United States overall, in giving exclusive authority to one group, has the power, as much as they could give the authority, to strip it away and to give it to a different group. And if we look especially after the beginnings of the Cold War in the United States and the passing of the Ted Stevens act, one of the reasons for our reorganization of international sport in this manner was to strive to be more competitive. Initially, it was competition directly against the former Soviet Union. But the goal here is to produce athletes and a product that's able to win. So we could say the United States is successful in sport as compared to other countries, which, if we want to be really honest, I think is part of the national identity of many countries to say, we are good, we win, we are successful. It all comes down to nationalism with this type of sport.

It's interesting, yes, we train our athletes to be successful, but, you know, you look at A country like Cape Verde that has a population a fraction of the size of the United States, as do the Scandinavian countries. And of course, we're looking at this World Cup. A number of the Scandinavian countries have now made it advance to the corporate quarterfinals, yet with a smaller population. Why is it that we have such a large population but have not been overly successful on the men's side of soccer in the World Cup?

Well, Michael, I just got back from three weeks in Norway, which is really interesting, because even before the World Cup began, just about everybody I was speaking with in Norway said that this team was going to be uniquely good in many of the countries, including throughout Europe, throughout Scandinavia, throughout south and Central America. They live and die by the sport of soccer. They'll call it football. And this is a sport that young people are trained to play and play almost exclusively from a very young age. While America's population is so much larger, we, even with the specialization in sport, if we look at the young population, many of those who are perceived as being top athletes very quickly specialize in American football, in basketball, in baseball. What stands out most to me is that in the American school system, beginning from pee wee sports straight through high school, American football and the sport we choose to play, soccer, are played during the same season, which means that, and I think this affects the male athletes a lot more than the female athletes because there's no full counterpart to American football for women right now. But a young boy is often forced to choose, do I want football or do I want soccer? And even with the increasing understanding of the risks that emanate from playing the sport of football, in terms of health, football has historically been the sport that's had the glory in the United States. Football has historically been the sport that has led some young boys from underprivileged populations to believe it's their way out and their way to move money. And consequently, we have not had as many of our elite athletes concentrate on sport of soccer as we may see in other countries.

Let me propose an alternate view. Soccer has become more and more popular in the United States, certainly since we last hosted the World Cup in the 1990s. There are more children playing soccer now in primary schools than there are playing baseball. But whereas in countries like Norway that you referenced, many of their athletes are judged specifically on merit, here in the United States, the wealthy are given advantages. I'm talking now about sports. And their children are giving advantages over others. For example, in soccer, travel teams are critically important, but they're expensive. It can cost thousands of dollars for youngsters to be able to qualify for the more advanced travel teams where the best players are supposed to be. Is it possible that we are just not being fair to some athletes that excel at sports but simply can't afford to advance to the more to the better training?

Well, youth sports in America are a disaster. And if you haven't read my friend at Baltimore Law School, Dionne Kohler's book on the youth sports system, it's a very good read. One thing that stands out to me as Charlie Baker tries to pitch Congress for an exemption from antitrust law for the NCAA is we're hearing more and more we need to save the college sports system because we need to save the non revenue sports. And my view has become the system of non revenue sports in college is part of what's generating this problem that colleges throughout the country are continuing to create a second method for admitting students that might not have the grades to otherwise go to the elite schools and that is competing for them in non revenue sport. The result of that has been it has become extraordinarily in the interest of parents with means who want to see their children who lack the natural academic ability or the hard work through academics to get into elite schools to become great athletes, to get this back root in. And I think a big part of why we see those are means spending so much money to train their children in sport is not the belief that these athletes will make it to the Olympics or to the World Cup, but really to get them into the Harvards and the Stanfords when they're not sitting on the grades and GPA to get there. Incidentally, might a few of them end up on the World Cup team in lieu of other athletes that can make it? Perhaps. I mean, I think there are two extremes we have and I think they're both problematic. On the one hand, this notion of the US system where there is pay to play as young as the youth level of five, where young kids of families with means are forced to specialize in the sport to try to get them a scholarship into a school where they don't naturally belong, I find that problematic. On the other hand, if you look at things like baseball and the Dominican Republic, when you are pulling young children out of school from very young ages and training them in sport as their way out, and focusing on the low income populations as a way out on sport, that too is problematic. So I've seen bad models on all extremes, but you're not going to ever get me to defend the youth sports system in the United States, it's very flawed. And I blame the NCAA a lot for that.

Yeah, I blame commercialization a lot for that. So I recently wrote an op ed about the missing words in sports, youth sports today. Those missing words being, did you have fun? You know, when I played in sports and my dad couldn't be at the game for conflict or business reasons, at the dinner table in the evening, he wouldn't ask me whether I won. He just asked me if I had fun. That doesn't seem to apply much anymore. I mean, I've been to Little League games and midget football games where some of the parents are so loud, so obnoxious. And it occurs to me that they are living in part through their kids and perhaps regretting that they didn't make it in the sport that their children are playing. And, you know, we've seen attacks on umpires and referees and coaches. It's hard to recruit people to be coaches and referees, umpires these days because of some of the parents being so antagonistic. What happened to the purity that we used to have in sports?

Well, I think there's no doubt that parents are in sport. I think about my father when he grew up in Brooklyn, he didn't play organized sports. He and his friends would go into the street and they would play stickball, and they'd organize their own games and they'd run their own games. And when grandma yelled at him, he would come home for dinner. But there was no parent involvement, and they had a ton of fun. And then I look at my generation. I played Police Athletic League soccer, I played Little League baseball all before I played high school sport. And the parents were beginning to overwhelm the event, and we didn't have leadership in the activity. And there definitely were parents who overreacted and took a lot of fun out of it. Some of the coaches who I had as young as Little League make me like sport less, not more. And now I look at this generation, and this generation has gone off the cliff. I have plenty of friends who travel around the country taking their children to sporting events. It's not even good enough for them to play on the local town team. They've become a part of sport tourism, and they discuss sports as part and parcel to getting into college, which is ridiculous. I mean, the values of sport to me are supposed to be in terms of leadership or in terms of discipline and in terms of fun and just getting some exercise, especially in a population. And teamwork. And teamwork. Now, at some point in time, when kids are 5 and 6, they certainly need some organization. But I question how you develop the teamwork and leadership skills when you have your parents shouting in your ear the entire time and you're not being given the opportunity on your own to learn how to work with other people. I'm not sure the same benefits of playing sport that we've seen historically will necessarily translate the same way into success in life when we have helicopter parents and helicopter coaches overseeing these activities the way they now do.

And you know, I don't know how we reverse that. I use the word commercialization. It's getting worse rather than better. Let's speak for a few minutes about the nil in college basketball and the fact that you're giving an 18 year old, 19 year old athlete millions and millions of dollars. I'm not suggesting that they don't deserve some recognition, financially or otherwise, but there's no guardrails here.

Well, Michael, respectfully here, and I think this is the first point in our conversation, I'm going to say I disagree with you. I was one of the expert witnesses who testified in the state of California on behalf of the Fair Pay to Play act which ensured college athletes were allowed to endorse products for money. The opposition to name, image and likeness is not really in opposition to college athletes earning money based upon the revenues they generate. It's in opposition to a deeper system of college sports which not only operates as a cartel in violation of our federal antitrust laws, but moreover disavows the values under which America is founded. Our problem emerges with a system of college sports where we have somewhere between 70 and 100 colleges in the United States where their leadership has decided that they don't want to make their primary mission being educating students. They'd rather operate as general managers, as quasi professional sports teams. In the mid-1980s, there was a great book written on this by Murray Sperber, who was a professor at the time at the Indiana University called Beer and Circus, saying it was easier to keep college students happy by giving them big time sports to watch and beer to drink than to educate them. Now, if you look at some of these programs right now, let's just take Ohio State University College of Athletics for a moment. At Ohio State University, their athletic department brings in over $250 million per year. The football program brings in more than half of that. What that means in essence is is this college makes in as much money or just about as much money from its, whatever it is, 12 game a year college football season, as we'll compare apples to apples we can't compare Columbus to New York that the Columbus Blue Jackets, the NHL team, brings in over the course of entire 81 game season. Now, historically, the revenue of a program like Ohio State would not be shared with the athletes. And the athletes who paid played were not even able to endorse products for money. What this has meant is coaches, athletic directors, administrators, walk away with many millions of dollars in salary. And the work product, the athletes earn nothing. Now, we could criticize this entire model of college sports. We could say that colleges should not be operating big time commercial sports. We could say that colleges should not be putting their athletes on planes several times a week. We could say that colleges should not be maximizing revenue through television deals. But they are. Now, if we want to scrap an entire system and move to a system like we have in Europe and Australia where sports is recreational, you're going to get no pushback from me. And if we want to bring back education as being our goal, you're going to get no pushback from me. But if we're going to operate under the system in about 60 to 100 colleges where college football and basketball are operated like professional entities that make huge sums of money off the labor of the college athletes, to then turn around and have all of these colleges reach an agreement with one another that collectively they will all agree not to pay their athletes and not to allow their athletes to make money in restraint of trade to keep the money in their own hands is first in my mind, a clear violation of our federal antitrust laws. And second, if you look at who our football and basketball players are in the United States, disproportionately first generation college students, disproportionately low income, and yes, I'll say it, disproportionately black. Those restraints were highly unethical. So I think by moving to a system where college athletes are being compensated is the best outcome unless we're going to gut the system altogether.

Okay, that's a very good legal description. Now let's talk about the practical description. Okay. How do you form an allegiance to a college basketball team when your favorite player is leaving the next year to get more money at another university? I don't disagree with your notion that the universities have lost their way in terms of education versus athletics. I agree with you 100%. I chair the board of trustees of a university and we grapple with this problem all the time. But it is the practical impact on the fan base is so unfortunate because these allegiances are weakening. Given the manner in which the Kids are allowed to simply jump from one college to another because of greater revenue potential. I also think that having raised four boys myself and knowing a little bit about the general mentality of kids in their late teens, that it might make sense to have some sort of a trust established for the maintenance of these funds and for their future uses. And I realize that's a balance too, because you mentioned a lot of these players come from underprivileged backgrounds and having that money to help their families might be important. So to put all of that money in a trust and limit their ability to use some of it in an appropriate fashion would be unfortunate. I do recognize that, but I'm not happy with the direction of this.

Well, let's address the second part and then we'll come back to the first. As far as the trust. My first job out of law school was at Skadden Arps. Skadden is a very large national firm. To be frank, they paid us very well. They didn't pay us investment banker salaries, but we were paid quite well. I had an office mate my first year at Skadden Arps on a Skadden Arps salary who could not balance his budget, who operated a loss month to month, whereas I paid my own rent, paid my taxes, paid off student debt and put about 50% of what I made away. So you have first year lawyers who overspend and don't know how to manage money. You have first year investment bankers who don't know how to manage money. It's not surprising to me that we have first year athletes, especially from families, that have not had traditional sums of money and education about money that are making those same mistakes. And I would support all types of ways of encouraging athletes who are earning sums of money to do so responsibly. And I think they need all types of advice. I would like to see athletes choose to put some of this money in trusts. And maybe there are ways that colleges could establish things with the athletes or put in place their own protocols that would enforce that. I think education about money in America is still poor today. I think education about finances especially poor amongst people in lower income communities where they've not had to deal with financial issues or their parents and family have not been advised. As far as the first issue and this point of the athletes are switching teams very frequently so there is no allegiance to a team anymore. Are you a baseball fan?

I'm a fan of anything where a ball is involved.

Do you have a baseball team of choice?

What's your team?

The Washington Nationals.

Don't say that. They're better than the New York Mets this year.

Before there were the Washington Nationals, was there a team that you rooted for?

In where?

Before we had the Washington Nationals, did you have a team that you rooted for?

The Washington Nationals, the origin of that team was in Canada, actually.

As the Montreal Expos.

Correct.

They were founded in '69.

Correct.

Okay, so let's go with this. Did you root for the Expos in '69 and the '70s?

No. But if you did, I'm from Brooklyn. You're from Brooklyn.

Dodger fan.

And the Dodgers were taken.

O'Malley turned traitor and took them to Los Angeles.

Leaving aside the fact that O'Malley took the beloved Dodgers away from us, do you find the product produced from the Dodger team declined substantially around 1972? Or do you not see a difference between pre-1972, even, we'll call it gasp, Los Angeles Dodgers and post 1972 Dodgers.

Modern history now.

But here's what you didn't say, and this is what's interesting to me. Prior to about 1972, baseball players were tied to the same team for as long as their teams wanted them by what was known as the reserve clause. In the mid-1970s, great New Yorker from the Upper east side, Marvin Miller, formerly of the steelworkers union, organized the baseball players. One of the things that happened through collective bargaining was the players, after a period of time, gained the right to free agents, which allowed them to move team to team. They were no longer tied to the same teams. Now, the Major League Baseball owners at the time, not liking this, were very happy to tell the public, and we have all types of newspaper interviews that say this, that fan interest in baseball was going to go down because players move from team to team. Now, if you look empirically in baseball since then, attendance has never been higher. Moving from the overall analytical to the more comical. I'll quote now, not newspapers, but my favorite comedian, Jerry Seinfeld. Seinfeld says that with all the movement of players, fans root for laundry, they root for shirts because the players change, but they remain loyal to the team. Now, I chose baseball as an example. We could choose any of our major professional sports leagues. We know that over a period of time, we've moved to an environment due to legal change, where players play for a team for as long as their team owners want to keep them, deflating their salaries to ones where we have free agency and player movement. A system where you could rely on the same players being there for as long as they Play well to rooting for laundry. And if we look at attendance at ticket price, whether it be Major League Baseball, the NFL. Absolutely. Certainly the NBA, it's gone up. And it hasn't just gone up at the rate of inflation, it's gone up substantially. Now that leads me to ask the question. So many of us say that we'll lose interest in college sports if athletes play for different teams in different years because they choose to transfer schools. Well, if that didn't happen with Major League Baseball when we got free agents or the NFL or the NBA, and in the very short period of time when we've seen player movement in colleges, we've also seen attendance go up and spending on games go up, why are we really so convinced that society is going to lose interest beyond the fact that the NCAA public relations says this over and over and over again?

So I have a different theory, and my theory is as follows. Sports plays a unique role in society. We're in a society right now where there's huge divisions in our country, There's a lot of unhappiness in our country, a lot of mental health issues growing every day in our country. Sports provides an outlet for people that frankly have nowhere else to turn for a little bit of vacation, if you will, for the vacation of the moment, from the day to day stresses. And so, yeah, they turn to sports. I, unfortunately, maybe not unfortunately, I'm a dinosaur. I remember the days of what I call purity in sports and what I enjoyed about them most back then. I love sports now. I'll be one of those paying for a ticket. I went to a World Cup game recently, but am I happy with the way sports are going? No, not really. And it's not about the money. It's about what we have lost over the years because of the commercialization. And let me say this. Look, there are very few universal languages. Music is a universal language. Sports is a universal language. Sports has the ability to bring people together. There was a time when the Olympics was in its infancy where they had a requirement that any conflict in the world, if you were to partake as a country in the Olympics, if you were involved in conflict during the course of the Olympic Games, you'd have to have a ceasefire. Not like the Iranian ceasefire that we're dealing with today.

Is that on or off today?

I'm sorry?

Is that on or off today?

Unfortunately, it's off. I have advocated for a peace treaty, if you will, for the World Cup that we, at least during the period of these some weeks, we put down across the world, our arms.

But to illustrate your point, it was on, wasn't it, until we lost to Belgium. Now it's off, in terms of the ceasefire.

No, I'm talking about real conflict. I'm talking about people dying, blood in the streets during the Olympic Games, as I refer to international conflicts. Wars were put on pause. Yes, And I'd love to see that come back, although it's naive to think it will. No, but, but, you know, sports can really make a difference. And I did a TED Talk on this issue about, as we talked about earlier, parents and sports and living through your child and rather than being supportive of your kid, whether they want to play a sport or not. I mean, I know some families where the parents are insistent that their child play, even though the child really doesn't, doesn't enjoy it and doesn't want to. And that sort of pressure is not, not, not healthy. But I do want to go back. I want to take us back to FIFA and about the World Cup and it being such a popular sport worldwide and, and you know, when they're on the pitch at the end of a game I was in, I went to the World Cup in Qatar and we played the United States, played Iran. And I'll never forget after the game, the players hugging one another and comforting one another. And we see that today as well after the game, players, regardless who wins, players giving one another their shirts and the Japanese fans helping clean up the stadiums. This is really extraordinary and just wonderful to watch. But it does. You know, the FIFA, which is the governing organization, it has been for 109 years of the world of. They call it football. Soccer. We call it soccer is not particularly loved and is seen as a, a corrupt organization in many respects. They went through a huge scandal about 13 years, 14 years ago. And there's no checks and balances. There's no government intervention in terms of governance, in terms of not only governance, but ethical guidance or morality in some of these leagues around the world. I wonder whether it might not be the case that government should be a little bit more aggressive in enforcing compliance and governance in sports.

Well, they certainly could be and probably should be, but I don't know if society is going to like the result. If we are, the United States could have taken the position that unless we have truly transparent bidding for World Cup games, we are going to pull out and we are not going to participate. I think that would get a lot of pushback in this country, as we were very happy to have and host the World Cup, to expect FIFA to do the right thing means that we have to expect each of the different member organizations that vote on FIFA policy as a bottom up association to do the right thing. Which means our government requiring these associations to do the right thing. And I think there'll be plenty of pushback there.

Oh, I suspect you're right. It's not utopia. I understand that. But you know, FIFA is a good example of a highly centralized and authoritarian organization. And while there are literally hundreds of federations that belong to FIFA, the decision making isn't made by the federations. It's made by those folks in Zurich who control the operations with an iron fist. And of course, the Swiss laws are much different, as you may know, from US laws. In fact, when the scandal occurred in FIFA in 2012, 11, 1213 time frame, it was in the United States where criminal charges were brought, not in Switzerland.

Not surprising. I mean, I think there are a few things I would like to see done. Whether the pressure would ever be placed on a government to make it happen remains to be seen. First, I'm a very big believer in transparency. So when it comes to bids for World Cup, I would like everything, including the records, to be done openly. The same way that the United States and other countries send people around the world to be observers of elections, I think it would be helpful to have separate parties from the sport governing associations in several countries send observers to watch the process. Second, I mean, it matters a lot less to me, the red card issue with the US player and how that was resolved than evidence of corruption in terms of bidding about who gets the World Cup. But I think there's one thing to have processes, there's other is to follow your own processes. I'm not sure in any area FIFA necessarily does a good job of showing publicly the efforts they go to follow their own processes once they're in place. And even to the extent that there's not always actual corruption, I think there's always the risk of the appearance of impropriety when things are done behind closed doors.

So there's an interim solution and one that our independent governance committee recommended to FIFA way back in 2013, and that is to appoint some independent directors to the board. They call it the council. Back then they call it the executive committee, now they call it the council. There's no independence on it. And I think that every institution, by the way, in business, in corporate America and Western Europe, you have independent directors on boards of directors. I think that every sports institution would benefit from having independent directors. The pushback at FIFA is Well, we need to have directors, council members who are familiar with our operations. It doesn't make any sense at all. You know, you can have people with financial backgrounds or compliance or governance backgrounds that don't need to know the intricacies of football, soccer in order to have a voice on a board, whether it be a director or a non voting observer or whatever is ultimately chosen to be done.

I think there needs to be a lot more observation and a lot more report back. I tend to be a big believer that anything that is done behind closed doors could be corrupt and often would be corrupt. You know, one of the incredible things about the American judicial system which I believe makes it work so well, and I acknowledge that our system is now growth of the British system, is that every decision that is reached in the US judicial system on some level is published and available for the public to read. Having that relative access to information where the public could see the process that is being used to reach a decision, I think does a good, great way not only to fight corruption, but also to fight the appearance of corruption. And I have no basis to say when FIFA has been corrupt than when FIFA has not been corrupt, because I'm not inside those doors. What I am very well positioned to say is that there's reasonable basis to be concerned about corruption that ongoes in FIFA because we lack access to the conversation, the information, the decisions that they reach. So much of what they do goes on behind closed doors and exposing observers to the entire process. Publishing decisions, explaining choices. Not just having shows where you announce who gets the World Cup, but having true transparency, I think not only reduces actual corruption, but would also help the organization a long way to dealing with this systemic belief, perhaps accurately amongst large substance of the public that there is corruption going on there. If there isn't any corruption, why not do things more behind open doors? And why not have observers in the entire process?

Marc, I love this conversation. As I said earlier, I could speak about sports 24/7. Your comments are very well taken, particularly those about transparency and how the sports world could benefit from being more transparent, as could government and as could business today. So thank you very much for being with us.

Oh, Michael, my pleasure. And one final question for you.

Of course.

What are we going to see first? Your Nationals win a World Series or the US men win a World Cup?

Well, the Nationals actually have won a World Series already and the men's team, our US Men's soccer team, have never won a World Cup. I am willing to place a wager it'll be the Nats first.

I'm with you.

All right.

Pay to Play: Politics, Money, and the Business of American Sports

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